Webster expects ‘soft landing’ after predicted FY14 shortfall

Webster University expects to end the school year with a balanced budget after it predicted a shortfall for Fiscal Year (FY) 2014. The university came up $13.9 million short while balancing its budget for FY14, which ends May 31. Webster’s total budget for FY14 was $221.4 million.

Webster Chief Financial Officer Greg Gunderson said vice presidents and deans received feedback from the university community and made recommedations to tighten the current budget.

“We have achieved a soft landing (for FY14),” Gunderson said. “There is not a need for any broad university action. The university balanced the current budget with the following strategies:

$4 million—Discontinued the retiree healthcare benefit plan.
$4 million—Administrative and staff salaries due to a hold on new hires as well as employee turnover.
$3 million—Adjunct pool savings resulting from cancelled enrolled classes.
$500,000—Deployment of contingency reserves
About $2 million—Other initiatives from vice presidents and deans including delays in new equipment purchases and travel.

The university’s discontinuation of retiree healthcare benefits will mean that pre-65 retirees will pay 100 percent of their medical benefits. Currently, the university pays a portion of the monthly premium, depending on the employee’s age and time at Webster.

Gunderson said the law required the university to set aside money for the program, which less than 20 people used.
Regarding the money saved from cancelled courses, Director of Public Relations Patrick Giblin said in an email interview, “The costs reflect both classes cancelled and classes that weren’t offered due to redundancies. This is a normal process at Webster based on enrollment shifts and impacts across the whole network (i.e., worldwide). At this point, we have not computed the average cost per adjunct course and only looked at the overall impact.”

Student tuition dollars make up 95 percent of Webster’s revenue. While undergraduate enrollment was up this past year, graduate enrollment declined. Graduate students are responsible for about 75 percent of Webster’s revenue, while undergraduate students make up the remaining 25 percent.

Drop in St. Louis campus graduate enrollment
Drop in MBA, need for updates in the program
Drop in counseling, needs move to accreditation
Federal sequesters impacted military enrollment

Nationally, Gunderson said, there has been a drop in graduate enrollment. Within that overall trend, there has been a drop in business and education master’s programs and a rise in Science, Technology, Engineering and Math STEM programs, primarily engineering.

Gunderson said the next building on Webster’s wish list is a science building. When the university has that space, it will launch more STEM degrees.

When budgeting for FY14, the university anticipated new initiatives to bring in money. Gunderson said it is important to be strong in both undergraduate and graduate enrollment.

He said that when it comes to enrollment retention, everyone on campus has a role.

“Every one of us can help retain a student,” Gunderson said at the Feb. 19 meeting.

Gunderson said the university will focus on structurally re-aligning the budget for FY15. For FY15, the university will cap its enrollment projections at the actual enrollment numbers for FY14 for planning purposes. Gunderson said at the Faculty Assembly meeting in early February that Webster’s intention for its FY15 budget is to reset the base of the budget to fit within existing revenue.

He said the university has about $6 million to address as it re-aligns FY15’s budget. The university is still compiling information and recommendations from deans and vice presidents regarding next year’s budget.

Gunderson said the university will be able to describe next year’s plan in about a month.